Utilico Emerging Markets Regulatory News (UEM)

8 March 2024

UTILICO EMERGING MARKETS TRUST PLC

(LEI Number: 2138005TJMCWR2394O39)

Publication of monthly factsheet

The latest monthly factsheet for Utilico Emerging Markets Trust plc ("UEM" or the "Company") will shortly be available through the Company's website at:

https://www.uemtrust.co.uk/investor-relations/factsheet-archive

Monthly commentary

PERFORMANCE

UEM's NAV total return increased by 0.6% in February, underperforming the MSCI Emerging Markets total return Index ("MSCI") which was up by 5.6% in Sterling terms in the month. Since 31 March 2023, UEM's NAV total return has increased by 9.7%, significantly better than the MSCI which was up by 3.3% in Sterling terms over the same period.

Global markets were fairly strong in February despite the more hawkish message from the US Federal Reserve that interest rates are likely to remain higher for longer as economic data from the US continued to be resilient. The US composite Purchasing Managers' Index (PMI) remained in expansionary territory and January's US nonfarm payroll data was ahead of expectations. The US market was also supported by the positive 4Q 2023 earnings reported (five of the 'Magnificent Seven' released results broadly meeting or exceeding expectations), helping to drive the S&P Index up by 5.2% over period and reaching a new all-time high in February. The Eurostoxx Index followed suit up 4.9% over the period whilst the UK's FTSE 100 Index was flat, despite data pointing to an improving outlook, as GDP fell in the final quarter of 2023 by 0.3% dragging the UK into technical recession.

In emerging markets, the Chinese Shanghai Composite Index ended the month where it started the year, up by 8.1% for February. The market was boosted by more positive activity data over the Lunar New Year period as well as more supportive economic and financial measures being announced by the government such as cutting the five-year loan prime rates (benchmark for mortgage rates) by 25bps and banning short selling. The Hang Seng Index was also up by 6.6%. Elsewhere in Asia the markets were also positive with the Vietnamese Ho Chi Minh Index up by 7.6% driven by the improvement in consumer confidence and the Philippines market up by 4.5%. The Indonesian market was up by a modest 1.5%, despite Prabowo-Gibran winning the presidential election by a one-round landslide victory, becoming the country's eighth president. In India, the SENSEX Index was up by 1.2%.

In Latam, the outperformer for the month was Chile, with the IPSA Index up by 7.7%. January's CPI data revealed inflation was significantly lower than expected at 3.2% and this, along with the weak economic activity reduced inflationary pressures, enabling the Chilean central bank to reduce interest rates more aggressively. Elsewhere Brazil remained subdued, with the Bovespa Index up by 1.0%, slowing down after its strong rally at the end of 2023. The Mexican market was down by 3.4% hampered partly by January's inflationary figures which were reported higher than expected resulting in Banxico (Mexico's central bank) keeping interest rates at 11.25%. Further, Mexico's President Andrés Manuel López Obrador recently proposed reforms created additional noise in the market.

In the currency markets, Sterling weakened against most currencies, down 0.7% against the US Dollar, down 0.8% against the Indian Rupee and relatively flat against the Brazilian Real down by 0.1%.

PORTFOLIO

There were two changes to the top thirty holdings, with TAV Havalimanlari Holding ("TAV") becoming a new entrant and Shanghai International Airport ("SIA") re-entering, replacing Telelink and Sonatel that have dropped out on relative performance. TAV is a Turkish listed airport operator that currently operates 15 airports and terminals across eight countries, including Turkey and Kazakhstan, handling in total 95.5m passengers in 2023. Both new top thirty entrants are capitalising on the social infra megatrend that UEM is currently witnessing across the emerging markets of the growth of the middle class that is demanding better quality services and infrastructure and has a higher propensity to travel.

Performance across the portfolio in February was mixed. The strong performers for the month were TAV, up by 26.2%, International Container Terminals up 18.8% and FPT Corporation up by 13.9%. Both TAV and FPT witnessed strong performance on the back of solid FY23 results with TAV reporting

passenger numbers up by 21.8% and EBITDA up by 19.4% for 2023 whilst FPT reported 20.0% growth in its top line and a 22.0% rise in its bottom line, ahead of market expectations. Power Grid was also up by 9.1% as the Indian company also reported positive quarterly results which saw improving momentum with several new project wins.

The weaker performers for the month were Kinx Inc, down by 13.5%, reflective of some investors taking profit given its strong performance into the end of January, whilst Holding Bursatil Regional (the new holding company that has originated from the merger of the Colombian, Chilean and Peruvian exchanges) was down by 5.9%.

In light of continued declines in listed EV charging share prices and headwinds for fund raisings by early stage companies, the valuation of UEM's investment in Petalite was also reduced in February by approximately 50%. Unlisted investments represent in aggregate 4.5% of UEM's portfolio as at 29 February 2024.

Portfolio purchases amounted to £7.8m and realisations totalled £17.6m.

DEBT

UEM's debt increased marginally over February from £25.9m to £26.0m, drawn as GBP 3.7m and EUR 26.0m.

OTHER

UEM's share price ended February at 223.00p, decreasing 2.4% over the month. The discount to NAV widened from 14.5% to 17.0%. UEM bought back 1.9m shares at an average price of 226.94p in the month. This takes the total shares bought back in the eleven months to 29 February 2024 to 10.7m, equivalent to 5.3% of the share capital as at 31 March 2023. 

The third quarterly interim dividend of 2.15p per ordinary share in respect of the year ending 31 March 2024, was declared in February, and will be paid on 28 March 2024 to shareholders on the register on 8 March 2024.

Name of contact and telephone number for enquiries:

ICM Investment Management Limited +44(0)1372 271486

Charles Jillings / Alastair Moreton

Montfort Communications

Gay Collins, Pippa Bailey +44(0)20 3770 7913

utilico@montfort.london